Nuverra Announces First Quarter 2018 Results

SCOTTSDALE, Ariz., May 8, 2018 /PRNewswire/ -- Nuverra Environmental Solutions, Inc. (NYSE American: NES) ("Nuverra," the "Company," "we," "us" or "our") today announced financial and operating results for the first quarter ended March 31, 2018.

SUMMARY OF QUARTERLY RESULTS

• First quarter revenue was $49.7 million, an increase of approximately 26.6%, or $10.5 million, when compared with revenue of $39.2 million in the first quarter of 2017.
• Net loss for the first quarter was $32.2 million, an improvement of $3.8 million, or approximately 10.6%, when compared with a net loss of $36.0 million in the first quarter of 2017.
• Net loss, adjusted for special items, for the first quarter was $13.6 million, compared with $27.9 million in the first quarter of 2017.
• Adjusted EBITDA for the first quarter was $2.4 million, an increase of $3.1 million compared with $(0.8) million in the first quarter of 2017.
• First quarter Adjusted EBITDA margin improved by 670 basis points from the first quarter of 2017.
• Total liquidity as of March 31, 2018 was $16.1 million

"Despite the effects of difficult winter weather in the first quarter in our main operating regions, Nuverra posted increased revenue and EBITDA when compared to the same period last year," said Charlie Thompson, Interim Chief Executive Officer.

"We have been extremely focused, and will continue to be, on improving operating margins and utilizing our assets efficiently.  Our recent announcement regarding the closure of our Eagle Ford operations and other equipment sales supports this strategy.  We believe that actions like these will allow us to generate better returns, grow our business, serve our customers and make Nuverra a desirable place for our employees."

FIRST QUARTER 2018 RESULTS

First quarter revenue was $49.7 million, an increase of $10.5 million, or 26.6%, from $39.2 million in the first quarter of 2017.  Of this 26.6% increase, approximately 8.0% is attributable to pricing increases, while 18.6% is a result of increases in activities.

As a result of increased activity, reliance on higher cost contract drivers and costs related to severe winter weather in our Northeast division, total costs and expenses, adjusted for special items, were $62.1 million, a 17.1% increase compared with $53.0 million in the first quarter of 2017.  Primarily as a result of price increases, gross profit adjusted for special items improved 62.5% to $8.1 million and gross margin improved 360 basis points to 16.3% of revenue in the first quarter of 2018.

Net loss for the first quarter was $32.2 million, an improvement of $3.8 million when compared with a net loss of $36.0 million in the first quarter of 2017.  For the first quarter of 2018, the Company reported a net loss, adjusted for special items, of $13.6 million. Special items in the first quarter primarily included severance costs related to the departure of our former CEO and $4.1 million in long-lived asset impairment charges for assets held for sale primarily in the Southern division.  This compares with a net loss, adjusted for special items, of $27.9 million in the first quarter of 2017.

Adjusted EBITDA for the first quarter was $2.4 million, an increase of $3.1 million compared with $(0.8) million in the first quarter of 2017.  First quarter adjusted EBITDA margin was 4.7%, compared with (2.0)% in the first quarter of 2017.

CASH FLOW AND LIQUIDITY

Net cash used in operating activities for the three months ended March 31, 2018 was $7.3 million, while asset sales net of capital expenditures provided proceeds of $8.5 million.  Free cash flow, defined as cash from operations less net cash capital expenditures totaled $1.2 million in the first quarter of 2018, up from $(7.9) million in the first quarter of 2017.  Asset sales were related to unused or underutilized assets, the proceeds of which are expected to be reinvested in returns-driven growth projects in 2018.  We expect additional asset sales in 2018, particularly in the second quarter, related to the closure of our operations in the Eagle Ford Basin.

Total liquidity as of March 31, 2018, consisting of cash and available borrowings, was $16.1 million.  Not included in the $16.1 million of liquidity, was an additional $7.1 million of borrowings available under our revolving facility that could be spent only on capital expenditures.  As of March 31, 2018, total debt outstanding was $37.9 million, consisting of $13.7 million under our senior secured term loan facility, $20.9 million under our second lien term loan facility, and $3.3 million of capital leases for vehicle financings.

BASIS OF PRESENTATION

As previously disclosed, the Company emerged from chapter 11 bankruptcy on August 7, 2017, or the "Effective Date," and elected to apply fresh start accounting as of July 31, 2017 to coincide with the timing of the normal accounting period close.  References to "Successor" relate to the financial position and results of operations of the reorganized Company subsequent to July 31, 2017, while references to "Predecessor" refer to the financial position and results of operations of the Company on and prior to July 31, 2017.  The Successor and Predecessor GAAP results for the applicable periods are presented in the tables following this release.  As a result of various adjustments to the condensed consolidated financial statements in connection with the application of fresh start accounting, the results of operations for the Successor period are not comparable to those of the Predecessor period.

About Nuverra

Nuverra Environmental Solutions, Inc. is among the largest companies in the United States dedicated to providing comprehensive, full-cycle environmental solutions to customers in the energy market. Nuverra focuses on the delivery, collection, treatment, and disposal of restricted solids, water, wastewater, waste fluids, and hydrocarbons. The Company provides its suite of environmentally compliant and sustainable solutions to customers who demand stricter environmental compliance and accountability from their service providers. Find additional information about Nuverra in documents filed with the U.S. Securities and Exchange Commission ("SEC") at http://www.sec.gov.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended.  You can identify these and other forward-looking statements by the use of words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "might," "will," "should," "would," "could," "potential," "future," "continue," "ongoing," "forecast," "project," "target" or similar expressions, and variations or negatives of these words.

These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, and any forward-looking statements contained herein are based on information available to us as of the date of this press release and our current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. Future performance cannot be ensured, and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include, among others: the effects of our completed restructuring on the Company and the interests of various constituents; risks and uncertainties associated with the restructuring process, including the outcome of a pending appeal of the order confirming the plan of reorganization and our ability to execute the requirements of the plan of reorganization subsequent to the effective date; the bankruptcy and, as applicable, the appellate court's rulings in our chapter 11 cases, including appeals thereof, and the outcome of our chapter 11 cases in general; the effects of the increased advisory costs to execute a reorganization; our inability to maintain relationships with customers, suppliers, employees and other third parties as a result of our chapter 11 filing; the loss of one or more of our larger customers; our ability to attract and retain key executives and qualified employees in key areas of our business; our ability to attract and retain a sufficient number of qualified truck drivers in light of industry-wide driver shortages and high-turnover; risks associated with our indebtedness, including changes to interest rates, decreases in our borrowing availability,  our ability to manage our liquidity needs and to comply with covenants under our credit facilities; the availability of less favorable credit and payment terms due to the downturn in our industry, our financial condition, and the chapter 11 proceeding, including more stringent or costly payment terms from our vendors, which may constrain our liquidity and reduce availability under our revolving credit facility; risks associated with our ability to collect outstanding receivables as a result of liquidity constraints on our customers resulting from low oil and/or natural gas prices; difficulties in identifying and completing acquisitions and divestitures, and differences in the type and availability of consideration or financing for such acquisitions and divestitures; difficulties in successfully executing our growth initiatives, including difficulties in permitting, financing and constructing pipelines and waste treatment assets and in structuring economically viable agreements with potential customers, joint venture partners, financing sources and other parties; higher than forecasted capital expenditures to maintain and repair our fleet of trucks, tanks, equipment and disposal wells; control of costs and expenses; risks associated with the limited trading volume of our common stock on the NYSE American Stock Exchange, including potential fluctuations in the trading prices of our common stock; risks associated with the reliance on third-party analyst and expert market projections and data for the markets in which we operate; risks associated with new technologies and the impact on our business; present and possible future claims, litigation or enforcement actions or investigations; financial results that may be volatile and may not reflect historical trends due to, among other things, changes in commodity prices or general market conditions, acquisition and disposition activities, fluctuations in consumer trends, pricing pressures, changes in raw material or labor prices or rates related to our business and changing regulations or political developments in the markets in which we operate; changes in customer drilling, completion and production activities, operating methods and capital expenditure plans, including impacts due to low oil and/or natural gas prices or the economic or regulatory environment; fluctuations in prices, transportation costs and demand for commodities such as oil and natural gas; risks associated with the operation, construction, development and closure of saltwater disposal wells, solids and liquids treatment and transportation assets, landfills and pipelines, including access to additional locations and rights-of-way, environmental remediation obligations, unscheduled delays or inefficiencies and reductions in volume due to micro- and macro-economic factors or the availability of less expensive alternatives; the effects of competition in the markets in which we operate, including the adverse impact of competitive product announcements or new entrants into our markets and transfers of resources by competitors into our markets; changes in economic conditions in the markets in which we operate or in the world generally, including as a result of political uncertainty; reduced demand for our services due to regulatory or other influences related to extraction methods such as hydraulic fracturing, shifts in production among shale areas in which we operate or into shale areas in which we do not currently have operations; the impact of changes in laws and regulation on waste management and disposal activities, including those impacting the delivery, storage, collection, transportation, treatment and disposal of waste products, as well as the use or reuse of recycled or treated products or byproducts; natural disasters, such as hurricanes, earthquakes and floods, or acts of terrorism, or extreme weather conditions, that may impact our business locations, assets, including wells or pipelines, distribution channels, or which otherwise disrupt our or our customers' operations or the markets we serve; the unknown future impact on our business from legislation and governmental rulemaking; and risks involving developments in environmental or other governmental laws and regulations in the markets in which we operate and our ability to effectively respond to those developments including laws and regulations relating to oil and natural gas extraction businesses, particularly relating to water usage, and the disposal, transportation and treatment of liquid and solid wastes.

The forward-looking statements contained, or incorporated by reference, herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's views as of the date of this press release. The Company undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, changes in expectations or otherwise. Additional risks and uncertainties are disclosed from time to time in the Company's filings with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

Source: Nuverra Environmental Solutions, Inc.602-903-7802[email protected]

- Tables to Follow -

 

 

 

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIESNON-GAAP RECONCILIATIONS(In thousands)(Unaudited)

This press release contains non-GAAP financial measures as defined by the rules and regulations of the United States Securities and Exchange Commission. A non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations or balance sheets of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Reconciliations of these non-GAAP financial measures to their comparable GAAP financial measures are included in the attached financial tables.

These non-GAAP financial measures are provided because management of the Company uses these financial measures in maintaining and evaluating the Company's ongoing financial results and trends. Management uses this non-GAAP information as an indicator of business results, and evaluates overall performance with respect to such indicators. Management believes that excluding items such as acquisition expenses, amortization of intangible assets, stock-based compensation, asset impairments, restructuring charges, expenses related to litigation and resolution of lawsuits, and other charges, which may or may not be non-recurring, among other items that are inconsistent in amount and frequency (as with acquisition expenses), or determined pursuant to complex formulas that incorporate factors, such as market volatility, that are beyond our control (as with stock-based compensation), for purposes of calculating these non-GAAP financial measures facilitates a more meaningful evaluation of the Company's current operating performance and comparisons to the past and future operating performance. The Company believes that providing non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per share,  in addition to related GAAP financial measures, provides investors with greater transparency to the information used by the Company's management. These non-GAAP financial measures are not substitutes for measures of performance or liquidity calculated in accordance with GAAP and may not necessarily be indicative of the Company's liquidity or ability to fund cash needs. Not all companies calculate non-GAAP financial measures in the same manner, and our presentation may not be comparable to the presentations of other companies.

 

 

 

 

 

 

 

 

 

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SOURCE Nuverra Environmental Solutions, Inc.